Article

Who's Making the Switch to mySAP ERP Human Capital Management?

by Mark
Lange | SAPinsider

April 1, 2005

It’s one thing to use traditional HR practices to achieve operational excellence -- for example, delivering payroll on time and with no errors. It’s quite another to use a more robust, integrated approach to manage, deploy, and retain human capital to improve overall business performance. Mark Lange, National Vice President of Human Capital Management at SAP America, discusses the distinction between HR and HCM and how mySAP ERP HCM enables this transformation.

The most successful HR executives I've worked with aren't afraid to get their hands dirty. They spend time understanding the business, going out on field service calls, sitting in on help-desk calls, and frequenting the production floor so they can get firsthand information on what the "people issues" are.
By combining their knowledge of operating issues with their understanding of the company's specific financial objectives, they can create training and development agendas, or implement technologies that improve existing processes or adjust current policies. They track the efficacy of HR programs, and demonstrate through analytics how the programs impact employee contribution and, ultimately, the bottom line.

Good HR and good business practices become indistinguishable. Everything is integrated, and in this we find the distinction between traditional HR activities and what is
now referred to as "human capital management," or HCM. Traditional HR services are largely administrative in nature, delivering the best possible service levels at the lowest possible cost. HCM goes beyond that to deliver and monitor specific and measurable operating and financial results. With payroll, we have a great example. Through traditional HR practices, you achieve operational excellence by delivering payroll on time with little or no errors. When you then take payroll, compensation, and benefits information and integrate it
with financial data (such as revenue) to deliver metrics
like revenue-per-employee or headcount ROI, that's Human Capital Management. You can see how one is a back-office
HR function. The other actually helps propel improvements
in business performance.

It's this distinction between traditional HR and HCM that is driving the mass defections from non-SAP HR solutions
to mySAP ERP Human Capital Management (mySAP ERP HCM). For example, mySAP ERP HCM is tightly integrated with the mySAP ERP platform, mySAP Customer Relationship Management (mySAP CRM), and analytics, enabling companies to manage, deploy, and retain human capital to improve business performance. Putting this into the context of daily activities across a couple of different industries will illustrate these points:

Discrete, complex industrial manufacturing operation
In this world, "traditional HR" is supporting payroll, settling wage rate disputes, and trying to keep benefits and disability expenses from escalating, but is vacant from the shop floor. HCM, by contrast, is integral to how the shop floor performs. If a plant supervisor sees a production
KPI going red, indicating a spike in materials waste at
the punch presses or an increase in unscheduled machine downtime, he flashes an alert to the floor manager. This manager suspects operator error is a factor, so he triggers a mandatory self-paced learning module on touch-screen kiosks in the break room for press operators to view during the following shift. The floor manager can then track the correlation between that training and machine downtime, materials waste, or other production floor
indicators such as throughput, yield, or quality. Training, now, is more than overhead. It establishes a direct link between workforce and operating performance.

Retail
Let's suppose you are a retailer and you want to increase sales of a new product that is soon scheduled to hit the stores. To help maximize sales, HR develops and distributes a learning module to kiosks in each of your stores' employee break rooms that explains the product and describes how to greet customers as they approach the product's display case. That's well and good. Having analytics in place that can measure the subsequent velocity of product sales relative to that training effort
is far better. Being able to gauge the sales volume of clerks or stores that have participated in the program versus those who have not, and seeing the efficacy of a specific training module — in real time — are direct
and immediate benefits of an HCM approach.

The metrics you use to measure the success of an HR campaign in the discrete manufacturing or retail industries clearly differ from those you would apply to campaigns conducted in the pharmaceutical, aerospace, utility, energy,
or high tech manufacturing arenas. But the idea of a strong, direct, and demonstrable link between HR and business activities remains constant. With a strong technology
infrastructure and a solid HCM strategy, you can deploy
and measure the impact of learning modules on a shop floor scenario where you're attempting to streamline
a manufacturing run, or in call centers where you're attempting to increase up-selling and cross-selling
activities.

With SAP technology and a robust solution set,
our customers are leveraging the power of integration, deploying on-demand programs to make business happen while measuring the investment on these types of people programs. Our customers are building strategies and
transforming the HR function to deliver Human Capital Management for the business, leveraging mySAP ERP HCM as the technology enabler to achieve their business goals — whatever the industry. The HR department cannot do it alone — integration by linking key human capital business processes to bottom line results is critical. It is
an evolution and not a revolution, and this takes time
and a well thought-out plan.

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